British-U.S. Trade Relations: A Strong Relationship Within The Global Stream

Thursday, January 1, 2004 - 01:00

The Editor interviews Alastair Newton, Director Investment, UK Trade & Investment U.S.A., British Consulate, New York.

Editor: Please give our readers something of your background and experience. How did you come to the Foreign Office?

I came to the Foreign Office in 1985 from the construction industry and spent some time in Africa. In 1989 I returned to London and worked in the department responsible for intelligence coordination. After a four-year assignment in Paris with the UK Delegation to the Organization for Economic Cooperation and Development, which included sorting out - or attempting to sort out, really - the investment regimes of the countries of the former Soviet Union, I came back to London in 1997 as Deputy Head of Policy Planning Staff, which is the Foreign Office think tank. Then, in 1998, I became Head of Economic Relations with special responsibility to the Prime Minister's office for G7/8 policy coordination. In 2000 I went to Lehman Brothers International for a two-year assignment as senior political analyst. Finally, in July of 2002, I returned to the public sector and my present position, which is Director Investment, UK Trade & Investment U.S.A. and Deputy Consul General.

Editor: Can you tell us what your responsibilities are at the British Consulate in New York?

In corporate terms, UKTI is a joint venture of the UK's Foreign Office and Department of Trade & Industry responsible for inward investment promotion and trade development. My primary responsibility is to promote inward investment, that is, U.S. investment directed toward the UK.

Editor: Would you tell us about the mission of the British Consulate and then the particular mission of your group?

The British Consulate work here essentially falls into three areas. The first is consular and visa work and involves the issuance of visas to foreign nationals wishing to visit the UK and needing visas to do so. Most of this work is accomplished electronically, utilizing a system that permits people to apply for visas on the Internet. One of the most intense periods of consular activity on the part of the British mission in New York took place following the events of September 11th.

Then we do work in the area of public diplomacy. That means promoting the UK in a variety of ways, including university tours, arranging speaking engagements by prominent British figures and so on. This comes under what is called the British Information Service.

The third main area is trade and investment. New York is the headquarters for British trade and investment promotion for the entire U.S. Sir Thomas Harris, my boss, is Director General for Trade & Investment U.S.A. We are pleased with where the UK is placed at the moment, considering the state of the global cycle. The UK has not suffered as deep a slowdown as the U.S. has in recent years. And some business pick-up is now evident. As an indication of that I should point to the fact that in the third quarter of this year, and for the first time since the middle of 2001, we exceeded our quarterly target for investment flow from the U.S. to the UK.

Editor: I take it you would describe the British government as favorably disposed toward business?

I would indeed. There has been a certain amount of comment recently in the UK press about taxation, possible regulatory creep and so on, but governmental rebuttal was swift and unequivocal. And well justified, I think. The British government has been and remains very pro-business. Opinion polls consistently show that business leaders in the UK regard this government as the most pro-business Labor government we have ever had; and regard Britain as a good place to do business.

Editor: Can you tell us about some of the incentives that the British government offers businesses that are relocating or starting up in the UK?

We are not big on incentives. For one thing, there are really stringent European Union rules about cash incentives for inward investors. There are some, however. They are known as the Regional Structural Funds, and they are available in particular corners of the UK which have experienced an economic downturn or market failure and need some pump-priming money to drive economic development forward. As a general proposition, we do not regard governmentally supported incentives as nearly so important for the start-up of new businesses or the relocation of existing businesses as a sound economy, modern infrastructure and the availability of a well-educated workforce.

Editor: Are there any tax rebates for setting up in particular areas?

Generally, no. There are incentives, but not specifically directed at inward investors. For example, we have a very favorable scheme of research and development tax credits available to any business in the UK, foreign or domestic. But in the broad, the attractiveness of the UK speaks for itself, and we are fully prepared to compete for inward investment with countries that utilize tax rebates and the like.

Editor: What types of foreign businesses are setting up operations in the UK these days?

We have several priority sectors that are doing very well at present. These include the bio-technology sector and life sciences. Eli Lilly, the pharmaceutical multinational, recently announced a major expansion of its production facility in Lancashire, for example. In addition, a considerable number of IT enterprises are moving into the UK at the moment, as are financial services companies.

Editor: Are these companies coming from all over the globe or North America specifically?

American companies seem to be particularly interested in the UK at the moment, but we are attracting an increasing amount of inward investment from Asia and from continental Europe as well.

Editor: Could you elaborate about the work that the Consulate does in representing British business and trade in this country?

We run an extensive program here in the United States, utilizing 14 offices around the country. This operation provides support for a variety of British trade missions and generates market research with an eye to trade opportunities for British exporters. All together, we have around 150 UKTI people on the ground.

Editor: How has British business reacted to the corporate scandals in the United States?

In the odd case where investment in the UK has been affected by corporate scandals in the U.S. I think there has been some interest. Otherwise British business has taken a pretty detached view. I would have to say that these goings-on did not come as a big surprise to many people in the British business community.

Editor: Is there any sense that the regulatory regime that is being set up as a result of the scandals could be a precedent for British business?

We are pretty confident about the regulatory scheme that is in place in the UK. We aim to get regulation right, which is to say we do not want either to over regulate or to under regulate the conduct of business in the UK. Everyone accepts that striking the right balance is a difficult proposition. What may be appropriate for the present may not work in the future, so we must be prepared to make changes when necessary. To that extent, what has taken place in the U.S. might invite a careful look from us.

Editor: Are there any trade issues between Britain and the United States that our readers ought to be aware of?

The question of American governmental support for domestic steel producers was clearly an issue; and the Foreign Sales tax issue remains one with a potential $4 billion worth of trade sanctions against the U.S. on the part of the European Union. There is also the matter of genetically modified organisms and beef hormones, where Europeans and Americans appear to have very divergent views. At any time there are many trade issues which are not high profile in nature, but which do need to be addressed. I hasten to add that these are not trade issues simply between Britain and the U.S., but rather trade policy questions which arise between the EU and the U.S.

Editor: Has Homeland Security had an impact on British-American trade?

Not in any negative sense. Homeland Security has resulted in a deepening of the degree of cooperation between our respective defense establishments, which means more joint project work on military systems. Homeland Security has led to an increase in opportunities for British business on both sides of the Atlantic.

Editor: Britain is part of NATO and the European Union, although it has not yet joined the Euro Zone. Can you tell us about some of the issues that must be addressed before a more complete integration with Europe occurs?

I think it is fair to say that the UK is completely integrated into Europe. European defense, for starters, is very strongly led by Britain and France because they have such a significantly greater military capacity than most of the other European Union countries. They also have a willingness to deploy troops in foreign places. I do not think one should read too much into Britain's non-membership in the Euro area. The government has clearly stated its intent to take the country into the Euro Zone when the time is right, and that will be measured in accordance with objective economic tests. When the time does arrive for Britain to enter the Euro Zone, British-U.S. trade relations will not be affected. Indeed, in light of the UK's pivotal role in Europe, such a step is very much in the interests of trans-Atlantic relations.

Editor: Great Britain, with its long experience in international trade and shipping, was part of a global economy long before the term was invented. May we have your thoughts on globalization? Do you think the process is inevitable at this point?

The answer to the last question is easy, and it is a resounding, yes. Globalization is something we all talk about now because we have a word for it, but it is, in my view, as old as time itself. We have been expanding the reach of our trade over millennia. From very modest beginnings in the distant past, power blocs and trade blocs have gradually expanded to encompass the entire world. It is hard to imagine that anything could roll back this state of affairs. To be sure, there are going to be distractions and hitches along the way, but overall progress toward a global economy into which the entire world is integrated seems to me to be inexorable at this point precisely because it has a momentum of literally thousands of years behind it. Any interruption of that progress is going to be to the detriment primarily of the world's poor, and everyone should understand that.

Editor: Is there anything you would like to add?

Yes. I would like to advise any of your readers interested in doing business in or with the UK that our new UKTI U.S.A. website is up and running. Please visit us at

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